$EOG Options Intelligence

🎯 SELL EOG NOV 21 115/120 CALL SPREAD

I recommend a bear call spread because the term structure shows elevated implied volatility above baseline historical levels, favoring premium selling. The 30-day Clean IV is about 32.6%, well above the 21.8% baseline volatility, indicating options are overpriced and premium can be collected. EOG’s stock price is currently $107.78, below its 50-day and 200-day moving averages (~$115.3 and $119.5), suggesting resistance around the 115 strike. The stock has recently declined amid analyst downgrades and sector weakness, with resistance near $114 to $115 noted in recent market commentary. Selling a call spread capped at 120 limits risk while capitalizing on the expected resistance zone.

Sell EOG Nov 21 115/120 Call Spread
Stock Price: $107.78 | Entry: Sell 115 Call at $3.20 bid, Buy 120 Call at $1.10 ask → Net Credit ≈ $2.10

📊 Trade Metrics

• Max Risk: $5.00 - $2.10 = $2.90 per share ($290 per contract)
• Max Profit: $2.10 per share ($210 per contract)
• Breakeven at Expiry: 115 + 2.10 = $117.10
• Win Probability: Moderate to high (stock below 115 resistance, delta of short call ~0.235)
• Days to Expiration: 28 days (Nov 21)
• Theta: Positive (time decay benefits seller)
• Vega: Negative (benefits if IV contracts from current elevated levels)

📈 Term Structure & Volatility Analysis

• Baseline 90-day Volatility: 21.8%
• 30-day Clean IV: 32.6% (overpriced by ~10.8%) → SELL premium signal
• IV Rank: 100% (highest in year)
• Earnings on Nov 6, so Nov 21 expiration captures post-earnings volatility contraction
• Market expects significant earnings volatility (Earnings Vol Multiplier 2.7x) but post-earnings IV tends to drop, benefiting premium sellers
• Calendar spreads less attractive due to elevated IV across expirations; directional credit spreads preferred

📈 Greeks & Volatility

• Short 115 Call Delta ≈ 0.235 (moderate bearish bias)
• Long 120 Call Delta ≈ 0.07 (hedge against large upside)
• Theta positive for spread seller, roughly +$0.05 per day
• Vega negative, benefits if IV falls after earnings

🎯 Why This Trade

The term structure reveals options are significantly overpriced relative to historical norms with a 30-day clean IV of 32.6% versus a baseline of 21.8%, signaling a premium selling opportunity. The stock trades below key moving averages ($115.3 50-day and $119.5 200-day), with resistance around $114-$115 confirmed by recent technical analysis and analyst commentary. Analysts have recently downgraded EOG with price targets lowered to around $125-$131, reflecting cautious sentiment. The upcoming earnings on Nov 6 create elevated IV, but selling premium in the post-earnings period (Nov 21 expiry) allows capturing IV crush. The bear call spread caps risk while collecting significant credit, aligning with the neutral to bearish technical outlook and high IV environment.

📊 Pro Analysis

• Current IV: 47.6% (market IV), Clean IV 32.6% (adjusted for extrinsic)
• IV Rank: 100% (strong sell premium signal)
• Expected Daily Move: ±$3.23 (~3%) supports strike selection below resistance
• Put/Call Ratio: 0.39 (bullish skew, but stock technicals suggest resistance)
• Market Maker Max Pain: $115 (strike aligns with max pain)
• RSI 14: 38.59 (neutral, slightly oversold)
• Price below 20-day MA ($109.24) and 50-day MA ($115.32), confirming resistance zone

🔍 Earnings Date Check

• Earnings on Nov 6, 2025
• Recommended expiration Nov 21, 2025 (after earnings) to capture IV crush and avoid premature expiry

💡 Trade Management

• Entry: Place limit order to sell 115 call at $3.20 and buy 120 call at $1.10 for net credit $2.10
• Target: Close at 50-70% of max profit (~$1.05-$1.50 credit remaining) after earnings or if price approaches 115
• Stop: Close if price breaks decisively above 117.10 (breakeven) or technical resistance fails
• Time Stop: Close 2 days before expiration to avoid last-minute gamma risk

🔒 Pricing Validation

• 115 Call intrinsic value: max(0, 107.78 - 115) = $0 (OTM)
• 120 Call intrinsic value: $0 (OTM)
• Spread max intrinsic = 0, so credit of $2.10 is valid and above intrinsic
• Put-call parity and spread pricing verified with current bid/ask

🔍 Market Overview

The broader energy sector is under pressure with mixed rallies but no clear breakout for EOG. Analyst downgrades and sell-side caution have pressured the stock near $108, well below its recent highs near $138. The technical setup shows resistance near $115, reinforced by the 50-day and 200-day moving averages. The high implied volatility environment, driven by upcoming earnings and sector uncertainty, favors premium selling strategies. The Fed's recent policy stance and macroeconomic data have kept markets in a neutral-to-cautious mode, supporting defined-risk bearish spreads rather than outright short positions. The dividend yield of 3.66% adds some fundamental support but is not enough to offset technical resistance.

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Confidence Level: Moderate to High
This trade balances risk and reward well, with defined max loss ($290 per contract) and a favorable risk/reward ratio (~1:0.72). The high IV environment and technical resistance support the bear call spread. However, unexpected bullish catalysts or a strong earnings beat could push the stock above breakeven, so risk management is essential.

Risk Assessment:
• Max loss limited to $290 per contract
• Risk of sharp upside move beyond $120 is capped but would cause max loss
• Earnings volatility could cause short-term spikes, mitigated by Nov 21 expiry after earnings
• Manage position actively around earnings and technical levels

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Let me know if you want a bullish or neutral alternative strategy or a calendar spread analysis.